For a second time, Rehoboth Beach commissioners denied a rezoning request for the residential portion of 330 Rehoboth Ave. The proposed rezoning failed by a 3-2 vote during a special meeting Jan. 31.

While still an official public hearing, the recent hearing was mandated by a judge who said city commissioners didn’t provide sufficient reasoning for denying the request the first time around.

Attorney David Hutt represented the applicants, 330 Hospitality, at the hearing. He reminded everyone how they got there.

The proposed rezoning of a residential portion of 330 Rehoboth Ave. has been on the books since January 2019, when it was first introduced as part of a new hotel called Rehoboth Grand. At the time, the planning commission recommended the applicant, Limitless Development Construction, go through the rezoning process instead of the board of adjustment process. Shortly after, Limitless, which is a branch of Milton-based Lockwood Design and Construction, and a 99-year-lease holder on the property, got into a legal dispute with the property owner. The planning commission decided to wait on hearing the rezoning request until the legal issue was resolved. When it was resolved years later, under the name 330 Hospitality LLC, a different makeup of the planning commission denied the request. That denial was appealed to city commissioners, who also denied it. That denial was appealed to the courts. After years of legal back and forth, this past summer, a judge ruled city commissioners did not provide sufficient explanation for their votes.

The questions, said Hutt, are how does this property get redeveloped and what’s the best path forward? The split-zoned use is not recommended, he said.

The lot is about 42,500 square feet, of which about 23,000 square feet along Rehoboth Avenue is zoned C-1 commercial, and about 19,500 square feet along State Road is R-1 residential. The developer, 330 Hospitality, is a partnership between Lockwood Design and Construction’s Don Lockwood and former Gallo Realty owner Bette Gallo.

Local Realtor Lee Ann Wilkinson, the daughter of Betty Gallo, presented commissioners with historical evidence showing the parking lot has been a commercial use for many, many decades. She also presented commissioners with letters from nearly two dozen surrounding property owners in support of the rezoning. Finally, Wilkinson presented commissioners with sales information for a property on Sussex Street behind The Ark Condominiums on Rehoboth Avenue showing this property was sold in 2024 for a million dollars more than it was purchased for in 2017.

This whole end of Rehoboth Avenue is screaming for redevelopment, said Wilkinson. None more than this property, she said.

Former Sussex County Councilman George Cole spoke in favor of the rezoning. Split zoning is a problem and this is a reasonable request, he said.

Lynn and Saurabh Srivaastava are residential neighbors abutting the property who live in Scarborough Village. They have had concerns with the proposed rezoning since the very beginning.

This project will cast a shadow, literally and figuratively, said Saurabh.

Commissioners Patrick Gossett, Francis “Bunky” Markert and Craig Thier voted against the rezoning. They argued the problem with rezoning the land is twofold – there is a whole list of alternatives that could be put on the property other than hotel parking once it’s rezoned, and the city’s comprehensive development plan doesn’t call for it.

The city’s comprehensive development plan specifically says to avoid any adverse impacts the city’s commercial district may have on residential districts, said Gossett.

Mayor Stan Mills and Commissioner Edward Chrzanowski voted in favor of the rezoning, primarily to settle the split-zoning issue.

The applicants acted in good faith, there has been absolutely no evidence of a detrimental impact and there’s a lack of opposition, said Chrzanowski.

Immediately following the vote, Lockwood said the development team would reevaluate the situation, but had no further comment.

Commissioners Suzanne Goode and Mark Saunders did not participate in the vote.

Goode was forced to recuse herself during a previous meeting because of comments she made on the rezoning request as a citizen years ago.

Saunders, who was sworn in as a commissioner in early December, voluntarily recused himself for a reason similar to Goode’s and because his property abuts 330 Rehoboth Ave.

Delaware Ave. property rezoned

Commissioners voted in favor of rezoning a strip of land on Delaware Avenue from residential to commercial.

The request was made by the owners of the Beach View Hotel at 8 Wilmington Ave., who are looking to remodel the property. The hotel lot stretches the width of the block south to Delaware Avenue. The Delaware Avenue portion of the hotel lot has a thin section on the western edge that’s designated as residential, but has been used as a parking lot for the hotel for decades.

Unlike the previous request, this strip of land is designated commercial in the future land-use map of the city’s comprehensive development plan.